Skip to main content

tv   Power Lunch  CNBC  March 26, 2010 12:00pm-2:00pm EDT

12:00 pm
time for our call to action on the stocks you need to watch in afternoon trading. cnbc matt nesto is here with a look. >> thanks, guys, very much. fourth gain in a row, 6 out of 7 in terms of the big benchmark indexes. look at a couple of the trends i'm tracking.
12:01 pm
come fly with me, i have three stocks that are flying today, all on takeover rumors. glg is up a very strong today and bloomberg reporting that man group out of the uk might be interested in a piece or all of it. radioshack also in play here today and rti international being said to be eyed by bea systems. doubling down on the casinos, all five higher here today and best percentage gainers in the russell 1,000. that's about 10% growth and also power stocks are replace strange buying binge going on here. three of the top ten volume actives in the s&p 500 are utilities. back to you. >> all right, matt nesto, thanks so much. that is going to do it for us here on "the call." >> i'm trish regan. >> i am larry kudlow. i was worried about melissa
12:02 pm
defending that mortgage intervention but we squared it off the camera. i'll see everybody tonight on "the kudlow report" at 7:00 p.m. "power lunch" is up next. >> bye-bye. all righty. fired up about housing. welcome, everybody, to power lunch. i'm tyler mathisen. it is a friday on wall street. the dow up again after yesterday's late day swoon. a higher close today means the industrials will have posted gains for 17 of the past 21 days. the tortoise rally back alive and well. >> i'm sue herera. housing welfare or war fare? the president is out with a new plan to help struggling homeowners. is aiding underwater and struggling borrowers the right fix or just kicking the can down the road? i'm dennis kneale.
12:03 pm
bernard madoff the fallout from the crime of the century still leading to foreclosures. we'll toss to the market action right now and bob pisani kicks it off at the new york stock exchange. nice, green day, bob. >> yes. financial s holding up pretty well. i just want to show you the etf for south korea, which is a basket of south koreans thoughts. reports in the last hour that south korean naval ship sank following an explosion near a disputed border with north korea. we had the squirmishes in the past and trying to get more information on what is happening. this had volume in the last hour and, again, we'll get you more on that as soon as we get it. weak dollar here today. a lot of the big material stocks and international stocks that are in the industrial space have been up and down this week on the week or the strength of the dollar. this is, of course, on euro strength and weakness and we have a little more clarity in
12:04 pm
greece. dollars weaker here today and the big material names have been to the upside. financials have had a mixed day here. interesting comments. bernstein cut 2010 and 2011 earnings and oppenheimer cut the first-quarter estimates for all the big banks here. with the exception of bank of america and jpmorgan, some of the other names underperforming. tradertalk.cnbc.com. how are we looking at the nasdaq? >> we are positive but settled into a range. 8.5% to the good. mr. pisani talked about the activity earlier in the week. china logic, a discount hotel chain in china and priced that high end of its range at 1225 and added another 12.5%. urban outfitters hit an all-time high of 38.74 and pulled back just a little bit. this goes all the way back ipo to 1993. i want to talk about some handsets. apple, everybody talking about
12:05 pm
credit suisse slapping a price target on it. research in motion reports next week but three analysts coming out with bullish comments and palm even got a little love from the analyst community up 6% after bmo capital upgraded it to market reform. let's go to sharon epperson. >> gold prices up 10% right now even after the rise in the euro and a lot of traders are talking about what is happening in south crea. looking at the report of the south korean ship sinking and then the south korean shop firing shots towards the north. when this happened, we did see gold prices shoot up right around 1125 or so. meanwhile, keep our eye on what is happening to the etfs. but not so much when it comes to oil prices. the problem with oil right now, it's the contract weighing on the price of crude and we are looking at a situation where demand is barely where it was a year ago and supplies at a 17-year high.
12:06 pm
rick santelli, to you in chicago. >> gas is still $3 in my neighborhood but it always correlates with the temperature, it seems. nobody knows that north korea is responsible but there's been saber rattling. you can look at the sinking of the ship on a timeline and then you can look at a two-year note and, yes, the yields did fall a bit. but it could be a reach if i told you with any certainly that several basis points were directly attributable to that situation. but many are joining that conclusion. as far as a bigger picture, we continue to monitor something but important, that is the relationship between our ten-year yields in europe. if you look at the year of date to ours, you can see we're at 386 and top of the range with the 10 and the 3.15 yield on the counterpart in europe and notice with a difference of 70, its widest, basically, since january of '07 as something to reckon with. it was 77 briefly this past
12:07 pm
wednesday. tyler, back to you. >> rick, thank you very much. the major indexes ticking higher today. can they hold on to the gains? there you see them. industrials up 0.5%. let's gather our power lunch insiders to chew it all over here beginning with nick colis and at the cme group jeff carter, independent trader with poin pointsandfigures.com. let me begin with you. after yesterday's dust up over the remarks, the market seems to be back. is the market cheering the fact tat it looks like greece is going to be settled or solved? >> i think in part it does. i think we're also looking forward to a couple positive catalysts coming up in the early part of april, first with the jobs report, which shows a gain in jobs for the first time in quite a while and later on in the month we're expecting some very positive earnings releases from u.s. corporations. so, i think the market is also looking forward to some better news on the fundamental side, as
12:08 pm
well. >> is that going to mean that the big caps will start to play in this rally in a way, mr. carter, that they have not so far? >> yeah, i actually agree with them. i think, ironically, the obama health care act will help the big caps more than it will help the small caps. >> explain that. >> well, i think any time you have government action like that, i think it's going to help the much bigger companies. if you look at the bailout of the bank sbanks, it really help solidify and hurt the smaller banks and i think the same thing will happen with any legislation that comes out of washington. >> talk about the impact of tax refunds. you're talking about up to record levels. i don't understand how that can be if the economy is crimped and we're raising taxes. >> it's a wonderful point. we had the same point of view looking that data and we're surprised to find that u.s. tax refunds are really at all-time high record levels and up between $4 billion and $5 billion every week versus last year's numbers.
12:09 pm
that's a big positive for the consumer and one that we didn't expect either. i think it's a combination of things like the first time tax buyer refund and that might play a role and it looks like folks perhaps even with lower income last year still overwithheld. still an issue which most americans allow too much withholding and they expect -- >> do we have a rebate of a few hundred bucks to rank and file me americans? is that a part of it? >> the bottom line is the last two weeks, for example, the equivalent of mailing every american, all 308 million of them a $10 bill aerevery week. >> jeff, you know, the naysayers out there say that there are some headwinds for this market. we had quite a run up and a number of stocks hitting all new all-time highs and powering ahead and yet we had some feds speak on the wire. mr. warsh talking about the fed independents and is there anything you see on the horizon
12:10 pm
right now that has the potential to derail this market or that has you nervous? >> well, i mean, you know, if a war decides to start up in north korea, that is not bullish for stocks. >> although there are those who think there are those who would favor the dollar, correct? >> it would favor the dollar, absolutely. a flight to quality there. i think everybody sees the macro economic effects of let's say increased spending and debt and all that bad news. the problem is when is it going to take effect? i don't see any inflationary head winds in the short term without improvement in wages. i think the case is people are making less money. >> just one final question for you, does the housing plan proposed by the president's folks today help or hurt stocks? >> i think in the short term it probably helps. any attention paid to that industry and to that problem is
12:11 pm
positive. the devab ablil is in the detai obviously, we have to wait and see. >> nick, jeff, thank you very much. >> take care, have a good day. >> you, too. all right, that european debt crisis that we have been talking about. the debt threat and sluggish u.s. treasury auctions, which is having the bigger market impact. two top currency watchers will follow the money for us. >> the president's latest housing plan is creating more fear and some frustration for homeowners who afor playing by the rules. of course, the fast money halftime report and the rest of the gang tracking the dow, march madness. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency.
12:12 pm
plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here.
12:13 pm
12:14 pm
standard & poor's reaffirming its rating for porltgle following steps by the government it cut the deficit to less than 3% of gdp by 2013. s&p keeping its outlook negative for portugal. the euro extending its gains against the dollar after european leaders agreed on a safety net for greece. the euro is up 1% on the news, but how might this impact other
12:15 pm
global currencies and what about the significance of those two d dizimably received. joining us michael, senior current strategist at byi melon. nice to have you here, gentlemen. >> sebastian, i'll start with you. in our story meeting yesterday, which is the more important here? is it the dismally received treasury option or the currency debate that is going on right now about the future of the euro? >> it depends on what your interest is. i guess the yield curve is more centric. >> so, what is the back up in the yield curve telling you now? >> well, it's telling you that the market was constrained in the tight range for a very long amount of time and now broke out and a few people went through some pretty steep stock losses
12:16 pm
and telling you that the demand coming out of central bank for u.s. treasuries is falling and, therefore, the yield curve needs to rise on the back of that one and buying other assets. so, they're moving out and probably buying credits and other assets. >> but, michael, the problem with that is from what we hear is a lot of these central banks worried about the credit quality of the united states. do you agree with that or not? >> i really doubt. certainly, a lot of talk from the brick nations and china has been concerned about the quality of debt from the u.s., but really from a foreign exchange perspective, market players have shrugged off the two poor year options and interested, certainly, in what's happening in europe but the concern over europe has really not been negative as well as a dollar positive right now. it's very important. something very fundamental may have happened here this week in foreign exchange with market players now shifting from being neutral to being a long dollar across the board. that includes the yen, as well
12:17 pm
as the euro and rallying in the dollar despite the fact that we have a rally in the stock market in the dow. that negative correlation and the risk on, risk off may have broken down somewhat and we may be returning to fundamentals, which will be a positive for the dollar, if, in fact, we get a positive payroll next week. >> the euro is gaining into the dollar today because of news of the bailout. i'm sorry for the simple question, but if you bail out greece you might bail out the next one and the next one. >> it's a german bailout and german bailout is highly deflationary and it's a pretty strict one. the house is not only going to be greece, but be the other countries in europe from spain to portugal to everybody and that means fiscal tightening all across the board and growth on the back of that one and therefore if you want to make returns out of the european asse assets, they're going to be lower than you would expect. >> following up on dennis' point, michael, where does the
12:18 pm
euro ultimately settle later this year versus the dollar if there are repeated and continued fiscal problems in the euro zone? >> i think it has to be across the board, positive for the dollar. i think the market wants to remain long dollars here. they're not convinced that the greek rescue plan is really a rescue or a plan at this stage. >> is it 130? >> it could be at 130 next week. i have no doubt about that and in terms of later this year once the fed starts to hike interest rates and normalize interest rates the dollar has considerable upside to it. >> sebastian, what are the best currency plays then if we're seeing the shift in the fx markets. what are the best plays for investors? >> i would agree with my colleague, lower and the short term and rel atiative and it's massive growth of productivity in the u.s. and a lot of things are improving and they went
12:19 pm
through subprime and europe and they're starting with a greek episode and the clean up of the balance sheet already has happened to many in the u.s. for the dollar to buy. >> very quickly, sebastian, what about the roopy on the board that you're interested -- >> they have expensive monetary policy and everything very fundamental on the policy and they'll have no choice eventually. this is a one, two, three, four years down the road, you know, with deep pockets for shocks. but it's a very good buy in the long term. >> long time since i heard long term screaming buy in this market. thank you, gentlemen, very much. >> i thought you just asked them about the groupie. i know that sebastian had groupies. >> i'm sure he does. i'm sure he does. and they're also fan of the rupee. seven straight months of expansion in american manufacturing, is this trend
12:20 pm
translating group or no groupie into job growth? does the job industry have a future in america? pack up and move to china. we have an in-depth look straight ahead on "power lunch." hey can i play with the toys ? sure, but let me get a little information first. for broccoli, say one. for toys, say two. toys ! the system can't process your response at this time. what ? please call back between 8 and 5 central standard time. he's in control. goodbye. even kids know it's wrong to give someone the run around. at ally bank you never have to deal with an endless automated system.
12:21 pm
you can talk to a real person 24/7. it's just the right thing to do. you can talk to a real person 24/7. band now we're insuring overts do18 million drivers. gecko: quite impressive, yeah. boss: come a long way, that's for sure. and so have you since you started working here way back when. gecko: ah, i still have nightmares. anncr: geico. 15 minutes could save you 15% or more on car insurance. tdd# 1-800-345-2550 to help with my investments. tdd# 1-800-345-2550 so where's that help when i need it? tdd# 1-800-345-2550 if i could change one thing... tdd# 1-800-345-2550 we'd all get a ton of great advice tdd# 1-800-345-2550 just for being a client. tdd# 1-800-345-2550 i mean, shouldn't i be able to talk about my money tdd# 1-800-345-2550 without it costing me a fortune? tdd# 1-800-345-2550 if i had my way, investment firms would be tdd# 1-800-345-2550 falling all over themselves to help me with my investments. tdd# 1-800-345-2550 (announcer) at schwab investors rule.
12:22 pm
tdd# 1-800-345-2550 are you ready to rule?
12:23 pm
chrysler offering 50 rejected dealers the chance to rejoin its network. those dealers were among the victim of the dealer cutback last year. they were among a group that had gone to arbitration to try to keep their chrysler dealerships open. chrysler says those 50 are in locations that have limited, adverse impact on the current dealer roster. reports are that the recovery in manufacturing is gaining some traction for 2010. the mapi predicts 3% growth in non-high-tech manufacturing and
12:24 pm
15% growth in high-tech manufacturing. so, will that translate into jobs? joining us, cliff baldwin. thanks for being with us, cliff. >> pleasure to be with you. >> the overall outlook is good, but what about the job's part of it? >> unfortunately, when jobs do come it will not be for a while and it will be slow. manufacturing have had the benefits of much-improved manufacturing processes and leading edge technologies, but it's also dealt with the stresses of increasing global competition and, unfortunately, that has not made it a major job's contributor for the u.s. economy. >> now, these improvements you're talking about they haven't happened just since the downturn so is it all along in the fat times before the me meltdown we would have been making all this stuff with fewer people anyway? >> manufacturing has not been a real job creator. the world has infringed upon the manufacturing sector and manufacturing business decision
12:25 pm
makers have to deal with the stresses of both selling into and the competition of major countries, powerful emerging markets. they have done so by making their production processes much more productive, a power dime called lean manufacturing and all that time has allowed us to produce more efficiently with fewer employees, but, more importantly, with different kind of employees. more educated and more cognitive employees and that's been stressful for the employment situation. >> well, the kind of jobs that lifted so many millions of americans up from the lower income levels into the middle class on the backs of manufacturing, will they ever return? >> well, i don't think, you know, the types of jobs, the types of jobs that you're talking about is when gm ruled the world in the 1950s, the 1960s. but many other countries are in
12:26 pm
that stage of economic development. so, the u.s. is, you know, going to get a smaller share of what is now becoming a global pie. >> cliff, correct me if i'm wrong, those countries that are on, you know, on the assent like a china have had different educational standards, as well, in terms of math and science. that differentiates them, as well? >> if we want to get back to those days we have to start edge xating our kids much better and much more competitively in math and science. china's graduating a lot of kids and we're not. >> what's the connection there? >> well, because engineers are not are needed for this modern, global manufacturing sector. if you want to win in the manufacturing game, you have to be innovative and you have to differentiate your products. >> it's not the assembly line type of manufacturing any more, right? >> a manufacturing factor looks more like a computer laboratory these days than it does, you
12:27 pm
know, like the gm of the 1950s. >> that's what i was going to say, are we focusing on the wrong end of the telescope rather than worry about the carmaking base for our manufacturing, why don't we look at high tech. grow 15% your forecast says and we just got to build more mri machines and fewer volkswagens or chev chevys. >> absolutely. it was never a strong one for us since the 1970s and it's not going to be a strong one. the demographics of oil consumption is much better for developing economies, anyway. the u.s. could have an advantage as high tech capital goods for the manufacturing process and that's what we need to focus on. >> where does green manufacturing fit in? >> i think it's an interesting, but an embryonic concept. i think it remains to be seen whether or not the green paradigm is the right one. manufactures themselves are dealing with a paradigm called
12:28 pm
sustainability, which is a realistic intersection between business and lean needs and the environment, but it's evolving. we will see. >> cliff, we heard from a number of people on the show that the manufacturing sector would be helped dramatically if the treasury labeled treasury a currency manipulator. that that will change the whole equation. will it, given what you just laid out about the fact that we need to focus on high tech manufacturing and education. would the currency change the manufacturing equation in the united states? >> well, listen, it's a misaligned currency with a major trading partner and we have to do something about it. it is costing us, but i don't think we can see that an adjustment of the chinese exchange rate is the solution to our long-term problems and long-term challenges. they must do it. china must do it for our own good. a lot of benefits to the chinese economy than take care of a problem. but we need to focus on educating our kids, really focusing on those industries of
12:29 pm
high tech capital where we have an advantage. while we are dealing with the chinese properly. >> okay. terrific, thank you, cliff, very much. appreciate it. >> my pleasure. thank you for having me. >> have a great weekend. can a stock that has surged 240% from the bottom of the market still rev up your portfolio? we'll give you the answer. she's waiting in the wings right over there. the fast money halftime report. >> waiting patiently. we have the analysts who downgraded best buy today. will he turn more bullish on the stocks. should best buy buy radio shack? we'll ask him that. qualcomm activity in the pits the day after it raises forecasts. all that and much more on the halftime report.
12:30 pm
12:31 pm
12:32 pm
welcome back. in the headlines at this hour, shares of apple on the rise, again. credit suisse raising its price target on the iphone maker to
12:33 pm
300 bucks a share from 2.75. sighting a stronger quarter than it had expected. nokia is agreeing to buy novarra a private held company for its service browser. and long live mirranda. shares of chiquita brands up 140% in the past year. sue? it's friday, we're ready to cross the finish line. >> still have the singing banana lady in their store. my kids go bananas. small caps versus large caps week to date, small man's world out there. check out the performance getting less, though, as we go on. 0.7% longer term, but, still, a much wider gap. if you look at the stocks i'm tracking here. number one, finish line.
12:34 pm
stocks up at a four-year high here today. 400% of the ten-day average volume. they came in with blowout earnings. same-store sales are up 10%. the year to date march sales are up about 10. you can see the big move there today. 14% on the stock. they have almost 700 stores in 47 states plus their website. their base in apple is an interesting black rock, their largest shareholder at 7% and i make a big deal out of that because bachelor number two is rti internationals. titanium play linked closely to the aerospace industry. can you think of an airline maker out there making a lot of planes and also oil and gas play. rti up big today, big volume and two time sales with no debt. rti. >> ty, over to you.
12:35 pm
sue, now to a name off the charts and might be off your radar, as well. recently trading at multi-year highs johnson controls surging more than 150% over the past year jumping more than 200% since the lows last march. here to break it down, rich, rich, welcome. >> good afternoon, tyler. >> this stock is trading in the low 30s right now, about 33. your price target as most recently as january was sort of 34 to 36. are you thinking this is about the end of the run for this stock or does it go higher? >> not necessarily. i think if you take a longer term look here and you look out over the next 24 months, we think there's upside to earnings, you know, largely driven by the auto sector. but we do think the building efficiency piece of the business, which is about 40% of sales is starting to bottom out and, of course, they had their power solutions business, which is batteries and that's 80% after market and we also think there is some upside there. if you take a longer term look,
12:36 pm
we would think there is a little more upside there beyond potentially where our price target is. >> your price target 34 to 36, or that was the one i saw. >> that's the latest and we have been upgrading that since we upgraded the stock last may. >> the p/e is 14, 15? >> 14 times on 2011. >> you don't think it's too richly priced at all. >> when you step back and look, again, going to the potential earnings upside. you look at 2010, for example, they're assuming 10.3 million north american production. we think there is nice upside to that. in our model, we have 10.7 million in north america and, potentially, there could be some upside to that and then the other thing is the european production, which they are calling for kind of a flattish in their formal guidance, we think there is some upside to that, as well. europe is trending better than most here at the start of the year. >> all right, rich, thank you very much. have a great weekend.
12:37 pm
>> great. >> you bet. coming up, the president expanding aid to struggling homeowners. a real foreclosure fix or just another quick fix to feed those addicted to the government high. details and debate on the other side of the break. here some of the nation's homebuilders are performing today. there you see them all with very nice gains.
12:38 pm
12:39 pm
12:40 pm
today is an important day. many people looking at some of the recent announcements regarding mortgage modifications. >> that's great, isn't it? >> come on, what do you think? >> if you're a bank, you get bailed out for overleveraging, if you are a country like greece, you get bailed out. if you're a homeowner with a second mortgage and fluctuating rate, you get bailed out. if you did the right thing getting a 30-year mortgage, you're sunk. >> that in a nutshell is the conversation you heard earlier on the street the fear that some homeowners are experiencing as the obama administration unveiled a new mortgage modification plan aimed at keeping struggling borrow oers in their homes. let's talk about that now with diana olick. she's at the white house and
12:41 pm
been all over the story. diana, this involves principal reduction for many homeowners. what are the parameters here? who would qualify and who would not qualify for this? >> sue, really the same people that would qualify under the home affordability modification program. now, remember, two parts of the principal. those in trouble on their loans in the modification program. you have to be owner occupants like we always said before. they can't be investors and this can't be a second home and this can't be a vacant home and they have to meet certain debt to income ratios for that. there is also, as we talked about this fha refinance program which is for borrowers who are current but just very underwater on their home. they owe so much more on their mortgages than their homes are worth. so, the parameters are much wider than we saw for the bank of america plan which only targeted certain specific toxic loans. this is for all types of loans and borrowers who meet the criteria. >> so, was the guy we
12:42 pm
affectiontally called the wolfman there, i don't know if you heard it, technically wrong if i did the right thing and took out a 30-year fixed rate loan i'm not going to get any relief under this? >> if you took out a 30-year fixed rate loan and you want to refinance that loan because you owe so much more than your house is worth, then you would perhaps qualify for the fha refinance plan and you would get some of your principal balance written down, again, if you're in the right spot in the country where the investors think it's worth their time. >> the investor component of this. i would assume there's going to be some pushback frainvestors. >> that's the question we put to the fha commissioner earlier today. remember, under the previous administration we had the hope for homeowners program which gave some incentives for investors to write down the principal and really nobody did it. single to low double digits, actually, of anybody who did that. what they say and what we actually really heard is that
12:43 pm
there has been a sea change among investors because there are certain markets in nevada, of course, arizona, where they will take huge losses anyway. keep the homeown oers in their homes paying their mortgages rather than see them walk away. if you look at a market in the d.c. area where the market stabilized and didn't take a big hit. investors will say why i would write down that benefit because i'm not going to see any value in that, i'll see home prices go up. >> two quick thoughts here, diana. i read a story when homeowners in trouble just walk away in 65% of the cases it's because they had no money down at all and no money down loans and having walked away from having to put $100,000 up. i can see assisting those who put cash down. but the second thing, diana, isn't this, in essence, another bank bailout?
12:44 pm
we hate bank bailouts but if i'm helping the homeowner, aren't i helping the bank? >> you're helping the bank but the other folks around them. the argument could be made in either direction. if you want the argument for other side, if you keep these borrowers in their homes you are saving home valus for everyone in that neighborhood. i may not get that reduction, but if my neighbor goes into foreclosure, i'm losing more on my home. >> does it lower the value of your home? we'll talk about that next time around. that's one of the questions. if you write down the principal for one, what does it do for the other? more on that administration's plan to aid the struggling homeowners. is the prolonging the housing kris sns that's our debate. $80 oil gas prices heating up. we'll look at that first on cnbc. national car rental knows i'm picky.
12:45 pm
so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose. go national. go like a pro.
12:46 pm
12:47 pm
welcome to the "fast money" halftime report. the markets come off the highs of the day. the nasdaq now in negative territory. let's get straight to the word on the street. the governor, steve grasso and katie stockton and mike girka of neural markets. steve grasso, want to go to you first because the wall street journal came out with a headline
12:48 pm
an hour ago saying the south korea president is holding an emergency meeting following reports from south korean ship had exploded and what is the talk down on the floor at this point? >> a lot of guys shaking their heads and scratching their heads figuring out what it could possibly be. if there is an escalation and now circumstances going on between north korea and south korea. plus, melissa, you have to remember this market has run up a lot going into the weekend we have a shortened holiday week next week and a lot of guys locking in profits and looking for a reason to hit the exit doors at this point. we could see self pressure throughout the rest of the day. >> the move in the markets, you know, fractions of a percent and the other moves that we would expect to see on heightened geo political tension suches as a move higher in oil and move higher in gold. we're not necessarily seeing that right now. let's put this all in context. >> i'm sorry to jump back in. i don't see a lot of people pointing towards the north korea, south korea just yet, but that is the only thing we can
12:49 pm
sort of target or attribute this selloff to. >> mike, this is an area of the world that you watch pretty closely. what kind of impact might we see monday morning when the asian markets due open in response to this. >> complete fear and confidence. it's not something that will turn markets upside down, but here in the western civilization you have spring break and you have easter week coming together, normally when markets get a little lighter in volume and volatility picks up. asia and europe now have concluded their weeks on the upside and i'm not surprised that you will see some profit taking. so, clearly emphasis to open up lower and really keep a keen eye on that. sprinkle in the way gold trades off this situation i think right now confidence will start to drop a little. >> we mention, of course, about the reaction commodities market. brian, in your markets you deal with versatility. what do you see there? >> a lot of us talk about gold and the gold index there. a measure of how much volatility going on in the gold markets and a lot of trend followers. when we get an initial move one
12:50 pm
way or the other a spike in volatility. people reaching to buy call physical the gold is rising or if the marksult falling. we have seen a spike in the gold the gvz. when you look when gold sold off, the gvz started spiking and we are reaching a triple top here in gold and you could see a selloff in gold if you see the gvz drop below. >> move away from the political tensions and focus on the politicals. taking a look at oil lower here right now. >> right, oil has lost movement and you see that in the fact that it has not been able to break out below resistance. in here the ability to gain traction over the short term is another issue and i do think that crude oil will see the high $60 per barrel range on that loss of momentum. naturally, you're seeing that effect relative strength in the energy sector very really.
12:51 pm
so, if you look at something like the energy, you can see it's broken down on a relative strength basis. that tends to yield a very sharp decline meaning a sharp phase of underperformference the energy sector despite the fact that it does seem to be pretty undersold here. >> grasso, before you leave a look at the broader markets here. noted that we are coming up on holidays and also coming up upon the end of the quarter for many managers out there, today may be the last trading session in order to dress up their portfolios. what sort of impact do you think that is having, in fact, if there are some fears in the market in terms of disguising the reaction? >> well, i would definitely see some sell pressure on this marketplace today. you know, guys we have an incredible run up on the market in the last month or so. i would really look for there to be downward pressure. once again, as long as we stay above 11.50. no need for concern. break down
12:52 pm
guys get neutral in portfolios. let's talk about smartphones. a lot of those are higher though the nasdaq is lower. jason morgan dubbing this year the year of computing. brian, what do you see here? we had qualcomm raising the outlook. bullishness out of the sector. >> definitely. a couple days ago i said if you're looking for out of the money calls look at stocks rallying higher. qualcomm is a name you can do that. some calls out to july are cheap. it gives you leverage and you've got to look for leveraged strategies in the low volatility environment. with qualcomm getting a pop, i like technology in the space they are in. >> the call from j.p. morgan is they are bullish about phone manufacturers that can compete on price. mike, that seems there will be growth in te merging markets and
12:53 pm
tough pricing wars in the u.s. >> actually, there is a quandary here in this scenario. if we start setting up a bearish base on a quarterly basis, do we come into the market and start buying it or wait for the dip? i think the space will do well in the next quarter. global demand, especially far east, will continue to ramp up. the question is if we get a pull-back, there will be more call buying at cheaper prices. i think the market is hesitant to buy it here. it's a timing issue. >> we want to get to a bold call from fbr today. the firm downgrading best buy to underperform despite the blow away quarter and better than expected guidance. steven chick, great to have you with us. it seems a big reason behind the call is your skepticism to their ability to keep up margins, what do you think they are too optimistic about specifically? >> well, you know, just coming
12:54 pm
on the heels of the past quarter where domestic margins were down 95 basis points, i think it's in my favor if notebooks and some of the low margin product categories which are growing the fastest continue, which i think they will. you have a natural margin mix headwind headed into this year. international is probably an area of 400 basis points lower margin business. that's been growing faster and is slated to continue to be a bigger piece of the mix as we look into next year as well. >> let me be the skeptic. international business for best buy relatively small compared to domestic business. as you head into the end of 2010 you're getting a boost from the holiday season, demand for tvs, upgrades on tvs, 3-d tvs. are people too bullish about that scenario this year? >> for one, the international business is bigger than it used to be. it's 25% of sales going north of that next year. it is a bigger piece now since
12:55 pm
they bought car fund warehouse a year ago. secondly in terms of the second half, good question, but the second half of 2010 and the holiday season, we cycle what we just came off of. they had a good black friday through november. you know, they reported a 7.4% domestic comp just yesterday. so eventually the equity market is going to start thinking about how the second half comparisons look. to me they look difficult at this point. >> last question, steven, there are reports that best buy could be a buyer of radio shack. does that make you positive on the stock? >> radio shock, we are an outperform on that stock. there are some -- i guess you could say logical strategies as to both companies are pursuing what we call mobility. you mentioned smartphones earlier. radio shack is strong in the area. best buy is doubling the store base of standalone mobile stores. i couldn't assess on how i would react in terms of what it would
12:56 pm
mean for best buy as a stock. there are strategic links to both companies. >> steven, thanks for joining us on this friday on the fast line. steven chick, best buy stock up by 1%. got to take a break. we've got your trade on a bank stock at a 52-week high. stay tuned. >> announcer: upsets trash your brackets? get back in the game. pick your winner. it's fast money madness. today at 5:00 eastern on "fast money."
12:57 pm
12:58 pm
12:59 pm
welcome back to the fast money half time report. casino names rallying today including wynn and las vegas sands. we should note that the hotel stocks are up, too.
1:00 pm
brian is seeing activity in the options specifically. >> las vegas sands, you mentioned the name. active call buying there. interestingly enough, early in the week call spread buying in las vegas sands. that bullishness continues. april 22 and a half calls. seems like las vegas sands won't be here for long. looks poised to move higher and break out. >> bernstein raised it to las vegas, too. his positive numbers coming out across the space. >> i want to get a fast flash in here. bank of america hit a new 52-week high. the stock is up by about 1% in session today. katie stockton, take a look at the technicals. will it break the 52-week high? >> i think it will. i look for a breakout on positive momentum and improved relative strength. >> we have to call the close. let's go around. mike, kick us off. >> this is a great place to take
1:01 pm
profits and look to buy the market in the next week. >> katie? >> i like the market longer term, but short term the complacency level is too high for my comfort. >> brian? s >> i agree. if we close lower i will lower some positions. >> i will buy it the monday i get back. >> that does it for us. on tonight's "fast money" the market melt-up is trying to continue. we'll tell you about a potential break down headed into next week. what are you working on? >> watching the markets with our daily specials for lunch. the government redoubling efforts to keep homeowners afloed float, but is it just creating an even bigger tidal wave further out in the ocean of debt? there is still commotion in an ocean away in europe, but a money guru has a plan to sail safely through it. from the hudson river to central park, new york's most powerful are changing the addresses as
1:02 pm
the old idea of the right address sinks under the weight of recession. >> there it is. welcome to the second hour of power lunch. i'm tyler mathisen. radio shack, up almost 8%. >> i'm dennis diehl. finishing strong with fresh 52-week highs. urban outfitters, coach and comcast among them. >> are corporation as better bet than uncle sam? steve liesman has been asking around in the wake of dismal options this week. what are you hearing? >> pretty interesting. obviously we have been talking all week about the two lousy auctions as well as the crunching of spreads or interest rates between corporates and government. let's take a step back and take a macro view of business versus
1:03 pm
uncle sam. let's look first at the total amount of debt. you can see that the federal government is now on the rise. look what's happened to business debt. it's capping off. i don't know if we have the year over year change. you find the change on business year over year has gone negative. there are the dates crunching together. these make five-year treasuries cheap compared to business debt or five-year swaps. finally, let's look at corporate credit quality. one indicator of where you want to be with your money. we finally had a change here. potential bond downgrades are going down, but they remain relatively high. on the upgrades finally ticking up. corporate credit quality is on the rise. i don't know if we have a final chart there. oh, that's the same one. again, reiterating the point. business debt is really capping off and declining and federal government debt is on the rise. so where do you want to put your money, tyler? maybe where corporate credit is
1:04 pm
improving and where supply is on the wane. tyler? >> thank you very much. supply and demand. a basic principle there. stay with us, steve. stocks are moving higher for the most part. they have softened a bit on news of a resolution for greece. the dow, i would say it's inching. that would be the right verb here. >> i think so. >> how do we play the market now? joining us is jack adam, chief investment officer from harris private bank. i want to talk generally about the market and about the housing plan that came out today. does it help financial services stocks? should i buy the big banks because of this? >> it improves transparency and to the extent transparency improves, investing in financial stocks, yes. i believe that most of this is really centered on the smaller banks. the larger banks have offloaded a lot of stuff. they have some second mortgages
1:05 pm
perhaps, but a lot of the stuff is positioned off. >> a lot of the housing stocks. we showed a chart about 20 minutes ago, they are up. lenar, the toll brothers. why would they be? >> i think it's supply. if the houses are not going to be foreclosed on then there is no new supply competing with their products. it's funny. i think month in and month out, i watched all of the lousy new home construction data and i was celebrating. the rest of the market was saying, this is awful. i'm saying, no, this is good news. >> you're working off inventory. >> right. it was like the old i love lucy with candy coming off the belt. all right, stop already. we have to put the ones we've got in boxes and then we can work on new stuff. that's what i thought was going on. clearly housing prices have come down. no question about it. it's a matter of now balancing
1:06 pm
supply and demand to figure out where we end up. >> you know, jack, one of the things you write about in the book is reading the market, reading minds and reading the psychology. we have an interesting change in psychology this week. the auctions didn't go well. corporates are doing better. central banks are looking elsewhere for places to put their money. what does that tell you about the market at this juncture? >> it's a cycle. if you go back to the depression, corporate bonds actually trade at a lower yield than treasury. look at balance sheets. we're running a 1.2 to 1.6 trillion dollar deficit. we've got multi trillion dollar debt. state and local governments, $50 billion deficits, multi trillion dollar debt. >> is this a point where things are changing? >> it's hard to know. i will say that cash on corporate balance sheets is at an unprecedentedly high level. >> you have it at 10% of the total cash -- >> cash on the sidelines.
1:07 pm
>> inside the companies? >> not necessarily. that's the money market fund. look at cash as a total percentage of total assets. we're running around 11 or 12%. >> versus what long term? >> probably five. >> over double. >> over double. that's why we are seeing buy backs, take overs. >> dennis, there is one other way to look at it. when you buy $10 of market cap of the s&p you get $1 of cash inside that right now. usually it's around 50 or 60 cents. so that means it really limits the risk inside but this is a question for jack. it points you to picking ceos as capital managers, right? who's the ceo that's going to put my money -- in other words, the money inside the company to work in the best way? that was one of the things around jack welsh at the time. he was essentially a mutual fund manager. >> yeah. that's really the issue. in my mind that's always been
1:08 pm
this whole skepticism that i had around private equity. i said, you know, you've got great companies out there. why is private equity that much better? in fact, i would rather level up a company than go buy private equity. you're right. managing cash and navigating in a market like this is key for management. >> as much as we worry that china and japan maybe don't love us or want to buy our bonds what if china is saying, oh, stocks are a better buy now. >> that's my bottom line. you've got to go somewhere. we've got unprecedented savings going on in china. in fact, even in germany and other parts of the world. the money has to go some place. so it's just a matter of what's the most attractive place to be? >> is the market at these levels still attractive to you? we call it the melt-up and we have had a dramatic change from the bottom. do you find compelling valuations in the u.s. market?
1:09 pm
>> i do. i prefer u.s. over the world right now. >> wow. that's a minority view. >> yes, it is. you think emerging markets are done, right? >> one of the themes today is manufacturing. i heard some guys say you want to talk about a contrarian bet, how about u.s. manufacturing. is that on the radar screen? >> absolutely. we are overweight in industrials and the tech. a lot of exports. to me that's the key. the thing is -- don't get me wrong. i'm a true believer in the emerging economies. absolutely. my concern is the emerging market stocks. over the last 20 years, emerging market stocks traded at a valuation premium to those in the u.s. each time they have underperformed the s&p over the subsequent 12 months. we're there now. >> you have to have a long time. >> i would rather own commodities. i would rather own industrials, u.s. large caps and then -- >> final quick question. does a rising dollar damage the
1:10 pm
thesis that you're in industrials and export-oriented toblg? >> it does, tyler. my trade is i was trading out of international large cap into these securities. so if i kept those international, the rising dollar would have hurt the trade, too. i'm keeping the dollar bet where it is, but playing it on commodities. for example, the rmb revalue. that could be huge for commodities. the world's commodities are that much cheaper to a country of consumers. >> jack, sticking with the idea here, the rising s&p, is that telling you anything about where employment in this country is going? >> absolutely. >> i did a study that looked at year over year change in the s&p push forward six months and i'm finding it's a remarkable correlation. it's sort of a geometric chart,
1:11 pm
but it's showing -- at least to me -- that over the next three months we'll see astounding improvements in the unemployment rate. >> wow. >> my concern is that people around the world, including the fed, will take these numbers and draw a trend line and start to tighten. that's my worry. i'm not worried about the employment picture, at least near term, but i'm worried about -- >> the reaction to it. >> yeah. that's where i think we could see kind of a peak mid-year and a let-down. >> we're going to keep you here to continue this. >> great stuff. >> it is. >> we are still an america that makes stuff. right now, let's get to the market reporters parting with bob pisani at the new york stock exchange. >> hello. like yesterday re-dux. we lost gains and it happened again. dow was up 65. now we are basically flat, a little bit down. let me show you the south korean etf, a basket of korean stocks. what we told you before
1:12 pm
basically holds. started around 10:30 we got flashes, a south korean naval ship is sinking after an explosion near the disputed border. we don't know what's going on here. as soon as we get clear details of what happened we'll let you know. what happened on the stock market, at least the korean stocks started moving down around 10:30. the s&p 50 0rks we didn't see reaction in our markets at all until 11:30 eastern time. maybe it was a delay, but what happened at that time is the european markets closed at the same time. and there is the french index which closed right near lows for the day as well. so the closing of the european market on weakness may have influenced our market to move to the downside as well. tough to sort it out. bottom line is we have given up gains for the day. tradertalk.cnbc.com. we are up on the week. >> we are, but we're struggling
1:13 pm
under performing the dow and s&p 500 now. the sell-off happened earlier than yesterday. you see right afternoon eastern time and we're around the session lows. the session low was half a percent to the down side. we have bumped off that. let me get through a couple quick things. don't usually talk about small caps but one is up 200%. a patent on a heart drug and abio is up 20 30r7b0%. lululemon had a downgrade. it was lower in premarket and even with the sell-off in the market it's up over 1%. starbucks up 1.4% and children's place up. what's not working? oracle, the numbers were good. maybe the guidance didn't wow people. there was a run-up after the close earnings so maybe there is a sell the new situation there. down 2.3%. microsoft, the battle for $30
1:14 pm
being won by the wears. priceline down 1.8%. finally, i want to close with genzyme. it's been beaten up lately but analysts said today, you know, the sell-off is overdone. buy it. a lot of people have. back to you. >> straight ahead, with summer gas prices expected to go above $3 a gallon, shell oil challenging students to find new ways to travel the farthest on the least amount of fuel. shell oil company's u.s. president joins us. plus, going global because everyone else isn't. greece got you down? eu got you down? don't worry. one global guru sitting right over there is starting two new funds. we'll talk to jack about it and this gentleman who has the funds to help you capitalize on the commotion across the pond. boss: y'know, geico opened its doors back in 1936 and now we're insuring over 18 million drivers. gecko: quite impressive, yeah.
1:15 pm
boss: come a long way, that's for sure. and so have you since you started working here way back when. gecko: ah, i still have nightmares. anncr: geico. 15 minutes could save you 15% or more on car insurance.
1:16 pm
1:17 pm
welcome back to "power lunch." we're still looking at gold prices around $1100 an ounce. traders watching the news about the navy ship sinking. sketchy details about the cause of the incident. we saw a pop in gold around 11:30. perhaps it coincided with the close of the european markets. we're also watching oil prices below $80 a barrel for the third straight friday. gene macmillan saying there is concern about the summer
1:18 pm
gasoline demand season. retail prices at the pump, $2.81 a gallon for the national average. that's the same as last friday. we're up 13 cents from the last month. we are also looking at perhaps $3 a gallon to consumers. will refiners start to pump more gas due to the fact that we are seeing $3 gas at the pump? good question for the next guest, dennis. over to you. >> all right. thank you very much, sharon. back in 1939, two scientists for shell oil made a friendly wager. which guy could get more mileage out of their cars. 60 years later the shell oil eco-marathon is one of the largest student competitions to design and build a car to travel the farthest distance on the least fuel. for a grand prize of $5,000. don't expect nascar speeds from these babies. here's marvin odum to tell us more. thanks for being with us. >> it's good to be with you.
1:19 pm
>> are you guys doing hybrids like the prius or even more inventive approaches? >> you're talking about more inventive things. imagine students released to think about whatever technology they want to follow. all their creativity going into cars and you see virtually everything you could imagine. all fuel types, all types of design. we see it here on the streets of houston. >> let me ask a dumb question. that is why would you subsidize a competition that in the end reduces demand for the products you make? >> well, to a large degree, this is what i would call a visible demonstration of our commitment to sustainable mobility. let me throw out a number for you. if you look ahead to the middle of the century, there is a good prediction that there will be three times as many automobiles at that point in time than there are today. that will create huge issues in fuel for that mobility. this is part of fulfilling the
1:20 pm
picture. >> marvin, what's the coolest thing you have seen and what mpg does it get? >> again, we have seen cars that run on every fuel type. you would be fascinated to look at some of the designs. just the design aspect alone is interesting. the students are just fantastic and totally enthusiastic. we have cars out here that will go literally thousands of miles per gallon. >> what's the strangest fuel source that they are relying on? or the most unexpected one? >> i think for people that aren't really used to looking at fuel, we have some running on pure hydrogen. we have some running on solar power. some running on biofuels. so literally grass turned into fuel. >> one did 2,757 miles per gallon last year. what was the fuel source? >> it was a -- it had solar power involved but ran on relatively conventional fuels.
1:21 pm
>> in the deepest part of your heart, you know none of this stuff will ever replace the wonders of petroleum, is it? >> it's going to be complementary to it. if you look at the expansion we'll see, the world will need all the fuel sources. it's why a company like ours is involved in biofuels. new york ci it will be complementary to petroleum. >> what are your expectations as to where oil prices may be for the year? >> let me give you a picture of oil prices in terms of how we look at it as a company. oil price during the year while it's obviously significant to annual results, it's not the way we plan our business. i will give you a longer term projection on oil which says anywhere from the $50 to $90 price range is reasonable for the supply and demand world we see out there. that will dmand depend on the situation in any given year. that's the range on which we
1:22 pm
plan our business. >> do you make money at $50? >> sure, we can. that's why i highlight that sort of range. as a company we have to make sure for the total portfolio projects we put together, we're happy as a business and returning to shareholders across that breadth of prices. >> you would rather be at $90, right? >> certainly projects are in the portfolio mix that need the higher prices. it's a mix of portfolio. >> good luck with the competition. we're interested to hearing the results. thanks for being with us. >> thank you. bye-bye. >> sue? >> thank you very much. we want to keep you up to date on the developing story that involves a south korean naval vessel that's sinking. we have from one of the korean news agencies the fact that there have been several fatalities in the south korean naval ship sinking.
1:23 pm
jim miklyzski says there was an explosion aboard the boat below the water line. it tore a hole in the hull. there has been speculation that it was either a missile or torpedo attack from north korea. however, jim tells us that officials are stressing there is no indication as of now that the boat was attacked. south korean officials say there are 104 south korean sailors aboard the patrol boat. they have pulled 58 sailors out of the water. we have seen market reaction to this event. international tensions frequently have repercussions and we have seen gold move higher. we now have the stock market moving lower by four points and we have seen a move on the yield curve with a move into the short term treasury arena all the way from the shortest end of the curve up to the ten-year note. it is a situation we are following. we hope to have a live phone
1:24 pm
call report from the scene in a short pile. as soon as we can arrange that, we'll bring it to you. now to your investing standpoint and horizon. one of the best value stock investors around has just launched a pair of what's called go anywhere mutual funds. they are designed to invest in securities that are priced cheap with hidden value down the road. david marcus with evermore global advisers joins us. formerly under michael price in the 70s and '80s. he is with us and jack ablin rejoins us. welcome. david, why now and why these types of funds? you have been in the business a long time. obviously you saw an opportunity and a gap somewhere. >> absolutely. after the crisis in 2008, we realized investors were clamoring for something they didn't quite have which is a fund that can go anywhere in the
1:25 pm
cap structure n the world and bring some of the elements typically found in hedge funds to the mutual pun spais and offer daily liquidity and a reasonable price. that's what we are bringing to the table. >> you're doing it on an international basis? >> right. we launched the global value fund and european value fund. >> europe? at this point? >> yes. >> to me it's a contrary play. i don't know whether it is to you or not. obviously you see value there. what attracts you to that part of the world? >> i have been investing in europe for over 20 years here. historically, the best opportunities are found in europe and anywhere when people are panicking, nervous, running away. that's what's happening in europe today. >> can i address that? i look at europe versus the u.s. as a global macro player and i have found while europe tends to trade as a discount to the u.s. historically that it's trading essentially at a relative premium to the historical relationship now at least on a price to book and price to value
1:26 pm
basis. i'm not going to disagree that i think you can find individual values in that space, but can you address the fact that maybe the relative value of europe isn't quite as cheap as we would have expected at this point? >> i'll tell you. we are really always about bottom-up company by company. relative volume is something we don't really -- value is something we don't really focus on. it's individual company value. that said, i think the headlines throw people off. a lot of companies groing through massive -- going through massive restructuring and change. the reality is the companies are cheap. sfm for instance, the sovereign debt crisis which plagued greece is not as much an issue for you because it's company-specific. your investment strategy is company-specific. so the headline risk is taken out to a certain exten-at the present time. >> we have to be aware of what's happening in the world. when greece is going through a
1:27 pm
massive cry circumstances people are panicking, running out. in almost 25 years of investing in europe, i have never invested in greece. now we are focusing on greece. we still may never invest there, but we want to go where less people are looking. we want to take advantage of the fact that things are being sold at indiscriminate prices. >> there was a lot of talk, gentlemen, that perhaps there should not be one currency for so many countries, that this was a test for the euro. that's one thing that had people fleeing europe. do you think one currency can govern over a multitude of countries? >> i do. they created it for a season -- to be more competitive in the global economy. now the first test is under way. they have to find a way to bail out greece and the other -- >> portugal, italy, spain, et cetera, et cetera. >> according to the imf, suggests to me that the system is broken. we as the united states have a common currency and also a
1:28 pm
common monetary policy and we are willing to bail out one another, like it or not, through washington. >> yeah. there hasn't been a lot of love. you have to admit that. there is not a lot of love for the bailout. >> but like it or not. >> right. >> and that's what they're doing. like it or not, they are going to bail out. >> to me, as long as they are bringing the imf into the equation, that says to me that the european union is really broken. it's -- it can't rely on its own resources. >> it's definitely stumbled. it has issues, but again that creates opportunity. >> absolutely. >> that excites us. >> in fact, firms like ours that do global macro will hire firms like yours to exploit these opportunities. >> there you go. you guys can have a cup of coffee together. best of luck with the new funds. pleasure to have you with us, david. dennis, other to you. >> thanks, sue. straight ahead, the government redoubling efforts to keep at-risk home owners in homes, but is obama and his folks --
1:29 pm
are they prolonging the pain? we'll look at it. >> all right. housing problems have kept a good number of unemployed workers trapped and unable to move where the jobs are. so some communities abandoned by traditional industries are finding new ways to put people to work. hampton pearson will have more on this later on. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day,
1:30 pm
all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here. this is not more benefits at greater cost to your company insurance. this is not how does it fit in my company's budget insurance. this is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all. if all you know about us is... aflac! ...then you don't know quack. to find out why more businesses provide aflac, visit getquack.com
1:31 pm
hi. welcome back.
1:32 pm
of course rick santelli here. "power lunch" is an important show because the important news happens at this time. the ten-year chart isn't the biggie but it is big in the following issues. up 20 basis points -- well, about 15 points. yields have come down, but the spreads we look at, whether it's swap spreads that are negative sevens, tens and 30s or twos to tens is still around 2.70 down from the widest 2.85. tens to 30s, at one point reached close to one full percent. unchanged on the week at about 89. maybe the more important spread is if you look at the boon compared to the greek ten-year, that's narrowed 15 basis points. there is also a story about ambec that hit yesterday. they are an insurance company like aig, but mostly known for municipal insurance. they're in wisconsin. their wisconsin regulator seized a bunch of contracts.
1:33 pm
they have to pay off on them in mortgage land so that their kitty will be available to take care of issues about munis which is a more important business. how it turns out is anybody's guess. it's worth paying attention to. tyler, back to you. >> i saw the story and you explained it better than i understood it. let's talk more about this obama administration effort to stem the tide of residential foreclosures. the plan targets homeowners who are currently unemployed, number one. and those houses that are under water, number two, or are currently worth less than the owner paid. that's the definition of underwater. will the efforts help or prolong the pain in the housing market? howard glazer is a consultant to the industry and susan walkter is a professor of real estate finance at wharton business school. i tell you what boggles me. it is the idea that nowhere in any loan contract i have signed -- and i have had them,
1:34 pm
and i've got big ones, or in any housing deal i have done has it been guaranteed or said to me that you're not possibly going to lose money and maybe your equity. is that the problem here? nobody's willing to face a loss? >> well, yes. but the problem is -- talk about too big to fail. it's not a question of the individuals. it's a question of the system, including the banking system going down. if the recovery, stabilization of the market doesn't hold, if we have a second dip we are all at risk. so it's a question of, yes, you're right, but on the other hand, we've got to respond to the risk to the system. >> howard, you know, with the new plan, the idea is to prevent foreclosure, but if you write down principal you're making the house worth less. don't you get to the same place as foreclosure eventually if you end up writing down aggressively principal on some mortgages? >> the house is already worth
1:35 pm
less now. by recognizing the loss today, you're avoiding a future loss that could be greater. that's really the concern. that's why the administration hit the reset button. you have 11 million borrowers underwater in their homes and they are more likely to default. if they go down in big numbers it's catastrophic for the economy. all the administration is doing today is removing the obstacles to refinancing the loans at a current market value, aligning the mortgage debt with the value of the home. that's price discovery which won't happen in a clean way otherwise. >> why isn't this better left to the banks to figure out? why aren't the banks cutting princip principal? >> that's the question from day one. securitization is at base a multiple of investors and there is great conflict among the investors. it may be in the interest, it is in the interest of the overall set of loans but there is conflict among the investors
1:36 pm
getting the job done need it is government to step in and bring them to the table. >> howard, what about the concept of necessary pain? we cannot heal unless we endure the pain, take the foreclosure, get in new buyers that come in at cheaper prices with better credit ratings? >> there is a lot of pain in the plan. investors have to take a substantial loss in many cases in order to get out of the loan and the borrower has to continue to pay albeit at a mortgage rate that is equal to what the value of the home is today. no one's getting a free ride. it's important to point that out. >> susan, the bank still has to rewrite down the value of the loan. so they take a loss on that loan that has been rewritten, right? >> true. there is a loss. it's not as though the banks are getting a free ride by any means, but the loss is less than if it went to foreclosure which is a loss for everyone that's far higher than this in a sense orderly loss. and potentially if we have this
1:37 pm
wave of foreclosures and just let it go that would threaten the recovery. >> you know, howard, what about those who took a 30-year mortgage, put a little bit of money down on their house? they're doing the right thing. >> absolutely. >> there is a lot of anger out there. if i'm one of the people with a 30-year or 15-year fixed, the conforming loan and the guy next to me gets principal reduction, does that not bring down the value of my home? >> the problem is you have already gotten a hit on the value of your home. it's the borrower who's done the right things, paid the mortgage on time every time who's the collateral damage of the risky conduct of others already because the value of their home declined. what the program does is say to the borrower, we'll refinance you even if you're under water because you have done the right thing. very important distinction here the administration is making. this is for current borrowers who, through no fault of their
1:38 pm
own, have seen values decline because their neighbor didn't pay their loan. it's a big change. >> so i get a new loan guaranteed by the federal housing authority. are we turning the fha into the next fanny and freddie crisis? >> fha is at risk. we are all at risk and if it doesn't hold fha will be in worse shape than the taxpayer as well. there is hope that fha will be in good shape again. when, i can't tell you. >> thank you very much. on the other side of the break, we have a live report from south korea on the sinking of the navy patrol boat in the region that's rattled the markets. >> we have had market reaction to it. we lost most of the gains on the trading session. we briefly moved into the red, came back up. now the dow is up under two points. the s&p is down 1.5 and the nasdaq is down almost nine. we will talk about that. it's been an action-packed last five days.
1:39 pm
monday, new challenges. the trader triple play. three ways to set you up for next week.
1:40 pm
1:41 pm
1:42 pm
we show you the korea etf and here's why. wall street and washington keeping an eye on a developing story out of korea where u.s. officials are trying to determine the circumstances surrounding the sinking of a south korean naval vessel. the sinking followed an explosion near a disputed border with north korea. for its part, south korea says it is not clear whether north korea was involved or not. the latest reports say several have died. there were about 100 naval personnel aboard the ship and some 60 or so individuals have been apparently pulled from the waters. joining us live on the news line from south korea is kiho kim. good to see you. >> hello. >> i wonder what you can tell us about what's known about what happened and why. >> reporter: basically what we know is that a 1200-ton navy
1:43 pm
vessel sank off the west coast near the northern limit line. it's a very sensitive area. it's only about a mile and a half away from the north korean coast. north korea does not recognize it as a real border because the u.n. command has designated unilaterally the area as a maritime border in 1953 after the korean war. the president's office and the defense ministry had separately held an emergency meeting about an hour ago. it's just wrapped up, but there is no statement out yet. the president is set to resume another emergency meeting tomorrow morning. for now, we're going to have to wait until the official statement comes out tomorrow. the rescue operation is still under way while the military is trying to determine the exact cause of the explosion.
1:44 pm
now, there have been initial reports of a possible torpedo attack or a shelling from the north korean coast, but the government says the possibility of that is a very unlikely without giving out any details. initial reports said people heard a loud bang which sounded like gunfire about 15 minutes -- about five hours ago, just before the ship began to syncin. later it was found the navy fired after finding an unidentified object which turned out to be a flock of birds. >> let me nail that one point. you said that south korean government officials felt that it was unlikely that this explosion aboard the ship was caused by a torpedo or a missile? did i understand you correctly? >> reporter: yes, it is highly
1:45 pm
unlikely. the area is mainly controlled by south korean patrol boats pretty much 24/7. >> that will lead me to my second question, mr. kim. do south korean vessels routinely patrol these waters and do they sometimes play a game of chicken or "we dare you"? >> reporter: this is an area very close to a south korean island called pyongyang. so this is far from the northern limit line border. i think this is why the government is playing down the possibility of the torpedo attack or shelling. >> thank you very much, mr. kim. we appreciate your monitoring the situation for us. jim miklaszewski of nbc news will be along shortly to tell us what the u.s. officials at the pentagon are making of the incident. >> a big week on wall street coming up. some data out. we'll close in a couple of hours
1:46 pm
after a an interesting week on the street. what bets should you put in place on monday? joining us now with the trader triple play, bobby heller, holly liss and independent energy trader ramsey balibise. i apologize for that, ramsey. >> that's okay. >> holly, we have had a wild week, two sloppy auctions and fed speak and financial regulation. how do you set yourself up? >> like you said, it is a lot of data. i think right now even though we have had an extreme move particularly at the long end of the curve we saw ten-year levels not seen in probably ten months. you have to be cautious that we probably are at the high end of the yield range. we weren't able to get through 390 without conviction, so the caution is that the yoold level holds and we move back to a level of 365, particularly if
1:47 pm
the employment data has not come out as strong as people are expecting. >> bobby, what about next week for stocks? we have the employment data but we also have a holiday in the middle of things, volume lightening up, end of quarter. there seems to be a little bit of pressure. >> exactly what you said. unemployment data will continue to be a factor in the market every time we come out with another number. it will be a shorter week. volume is lighter. every time we get up to the 10,900 you see sell pressure come in. there's not a lot of new news driving markets. bernanke is saying the same thing over and over. we hear of a greek solution, then a greek solution falling apart. i think you can take off some profits if you have them. a little selling and look to buy lower when it moves back. >> ramsey, everybody's looking at your market wondering what's keeping it above 80 particularly given the greece resolution and
1:48 pm
the middle east tensions and now south korean tensions. >> exactly. everything that's keeping above 80 is geo politics right now. we have a problem with south korea today. there was a problem in the middle east on wednesday. we have had a strong dollar this week and oil's coming off. if it can settle below $80, that's looking bearish for next week. it needs to settle below $80. >> we are a hair above it at 80.06. what would your target be for next week? >> we have to look at the monthly low of 78.06. that's where i will look for the first area of support. if it gets through 78.06, we had a range in oil between $70 and $80. if it can get below the monthly lows i can see it going to the bottom of the range quickly. but first it needs to settle below $80 today. >> thank you all very much. have a good weekend. >> thank you. >> coming up, an extreme manufacturing make over in
1:49 pm
pennsylvania where steel is long gone. a new green economy being forged. hampton pearson has more. >> reporter: hey, tyler. the winds of change and green manufacturing. behind me, giant wind turbine components, part of what could be a renewable energy manufacturing success story when "power lunch" continues. at's ons of independent investors? let's ask. when you're trading a stock, every penny counts. i hate when the trade is done and you find out you paid more than the quote price.
1:50 pm
i want it at the price i expect... or better. td ameritrade's unique trading platform uses multiple market centers to help you find the best possible price. i like those odds. i know they can't flat out promise a better price, but they're always looking for it. they know what matters to me. every online stock trade is always $9.99. not a penny more. and no maintenance fees. who else does that? are you ready to declare your independence? td ameritrade. independence is the spirit that drives america's most successful investors. announcer: trade commission free for 30 days, plus get 100 dollars cash, when you open an account. as having to decide to go for it? at the hartford, we help businesses of all kinds... feel confident doing what they do best.
1:51 pm
by protecting your business, your property, your people. you've counted on us for 200 years. let's embrace tomorrow. and with the hartford behind you, achieve what's ahead of you. ♪ manufacturing jobs making a comeback of sorts across the country in some areas.
1:52 pm
overall, pennsylvania's unemployment picture is relatively gloomy. last month the jobless rate rose to 8.9% and the state shed another 16,000 jobs. but pennsylvania did add 1,600 new manufacturing jobs. biggest monthly increase in that sector in three years. some of the jobs being added at a former steel plant using old infrastructure to support new green manufacturing. our hampton pearson is live outside of philadelphia with the story. >> reporter: hey, tyler, we're just north of philadelphia at the keystone industrial port complex. this is an old u.s. steel site. back in the '50s it was opened. in its heyday it employed 10,000 people. while a lot of the steel facilities are being demolished we are also seeing a renaissance of made in america green manufacturing here as a matter of fact. as a matter of fact, the giant wind turbine components you see
1:53 pm
behind me are at the heart of the comeback strategy. gamesa, the spanish wind turbine energy giant is investing $34 million building the first u.s. manufacturing plant here. competition for these facilities is fierce. not just among the states but worldwide. >> you have 50 states that are not only competing against each other for clean energy manufacturing. they're competing against china and the incentives that china can provide are going to far exceed what any state can match. >> reporter: now, the other on site success story here is ae polysilicon. they are manufacturing the purified material inside solar panels. they got a federal renewable tax credit. it's a giant step toward their dual goals of growing the solar energy business and hopefully creating as many as 6,000 new jobs over the next five years. now, what did it take to get the
1:54 pm
firms here? all kinds of incentives. some 12 million from the state of pennsylvania in the forms of grants, loans and tax breaks. again, the two firms on site don't have to pay property taxes until 2018. a pretty good deal. >> wow. that is a good deal. >> thank you very much, hampton. straight ahead, where power lives now. many of new york's elite are blowing up the old idea of clustering in the right address in favor of newer and more dispersed enclave because group think is dangerous. you will be surprised to see who lives near whom when we return.
1:55 pm
1:56 pm
1:57 pm
ask any new yorker and they will say their city is the greatest place in the world, home to more a-listers than anywhere else on the planet. but as the city's fortunes have turned downward the neighborhoods have changed. here to tell us where power lives now, kyle pope, an old colleague of mine from the wall street journal. hello, kyle. where does power live? how has it changed? >> dennis, how are you? >> i'm great. >> this started because i was reading an old tom wolf story that talked about the good
1:58 pm
buildings in new york. it was written in the '70s and the idea was that there were half a dozen good buildings where rich and famous people lived and where it was respectable to live. i started wondering where are the good buildings now. the economic downturn wiped away conventional wisdom of where to live and what neighborhoods are the best. so we went out and pounded the pavement and found out where a lot of wall street people, culture people, celebrities lived and it created an interesting map of the city. >> we have less than a minute left. before the crash what was the one or two best places and what are the one or two hottest places now? >> the upper east side of manhattan is the hottest place. anywhere along central park, there is a u that goes along the park, hot. the upper east side of manhattan is no longer what it was. downtown is where the action is. it's the most expensive part of the city. the upper east side is fading. we profiled the river house
1:59 pm
which was the elite address for a long time. it has vacancies now which is unheard of. if you look at who remained on the upper east side of manhattan it's the wall street crowd. especially the ceos of the big investment banks are still up there. everybody else has moved downtown. >> good work, kyle. thanks for being with us. >> take care. >> that does it for us. "street signs" starts after the break. have a great weekend. because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes,

32 Views

disc Borrow a DVD of this show
info Stream Only

Uploaded by TV Archive on